Constellation Brands' Q1 Earnings Beat, Sales Top on Beer Strength

Constellation Brands, Inc. STZ reported first-quarter fiscal 2027 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. The company’s sales declined year over year, but earnings improved from the year-ago period.The fiscal first quarter reflected steady execution across…

Constellation Brands, Inc. STZ reported first-quarter fiscal 2027 results, wherein the top and bottom lines surpassed the Zacks Consensus Estimate. The company’s sales declined year over year, but earnings improved from the year-ago period.

The fiscal first quarter reflected steady execution across Constellation Brands’ core businesses, with earnings benefiting from improved profitability, disciplined cost management and continued strength in the beer portfolio. The Beer business remained a key driver, supported by shipment growth, favorable pricing and strong share gains across tracked U.S. channels, even as some flagship brands faced softer depletion trends. The Wine and Spirits business continued to reflect the impact of portfolio divestitures, but its remaining brands delivered organic growth and outperformed the broader category.

Comparable earnings per share (EPS) of $3.43 rose 7% year over year in the fiscal first quarter and surpassed the Zacks Consensus Estimate of $3.22. On a reported basis, the company’s EPS was $3.79 compared with $3.43 reported in the year-earlier quarter.

Constellation Brands Inc Price, Consensus and EPS Surprise

Constellation Brands Inc price-consensus-eps-surprise-chart | Constellation Brands Inc Quote

Net sales declined 3% year over year to $2.433 billion but surpassed the Zacks Consensus Estimate of $2.404 billion. Organic net sales increased 3% year over year.

STZ’s Q1 Performance Details

Constellation Brands' sales for the beer business jumped nearly 2% year over year to $2.28 billion, backed by a rise of 1.8% in shipment volumes and favorable pricing. Depletions fell 0.3% as declines for Modelo Especial of just 2% and Corona Extra of about 5% were more than offset by increases from Pacifico, Victoria and the Modelo Chelada brands of nearly 21%, 14% and 6%, respectively.

Sales in the wine and spirits segment plunged 47% year over year to $149.2 million in the fiscal first quarter. The decline mainly reflected a 64.1% drop in shipment volumes tied to the 2025 Wine Divestitures.

On an organic basis, wine and spirits net sales rose 8%. Organic shipments increased 7.7%, while depletions grew 6.6%, led by gains of approximately 4% for Kim Crawford and 62% for Mi CAMPO Tequila. The wine and spirits portfolio outpaced the total wine and spirits category in both dollar and volume sales across Circana U.S. tracked channels.

The Zacks Consensus Estimate for the company's beer, and wine and spirits segments is currently pegged at $2.27 billion and $149 million, respectively.

Peeking Into Constellation Brands’ Margins

STZ's comparable operating income came in at $834.2 million, up 6% year over year. Reported operating income rose 18% to $845.3 million, while reported operating margin expanded 630 basis points (bps).

Operating income for the beer segment rose 2% year over year to $891.4 million. The segment operating margin was 39%, nearly flat year over year, as shipment volume growth and favorable pricing were offset by unfavorable mix and higher marketing and other SG&A spending.

The wine and spirits segment reported an operating loss of $1.1 million, as compared to the loss of $6 million in the year-ago quarter.

STZ’s Financial Position Seems Strong

As of March 31, 2026, Constellation Brands’ cash and cash equivalents were $96.6 million, long-term debt (excluding current maturities) was $9 billion and total shareholders’ equity (excluding non-controlling interest) was $8.5 billion. The company generated an operating cash flow of $662 million and an adjusted free cash flow of $485 million in fiscal 2026.

STZ’s board announced a quarterly dividend of $1.03 per share for Class A shares on June 30, 2026. The dividend is payable on Aug. 13 to its shareholders of record as of July 30, 2026.

The company returned more than $400 million to its shareholders through share repurchases and dividends. It repurchased $324 million of shares year to date through June 2026.

Constellation Brands still forecasts an operating cash flow of $2.4-$2.5 billion for fiscal 2027. It expects free cash flow of $1.6-$1.7 billion. STZ plans to incur capital expenditures of $800 million in fiscal 2027.

Constellation Brands’ FY27 Expectations

Looking forward, Constellation Brands updated its fiscal 2027 reported EPS outlook to $11.50-$12.20, up from the previous estimate of $11.10-$11.80. The company expects comparable EPS of $11.20-$11.90 for fiscal 2027 compared with $11.82 earned in fiscal 2026.

Enterprise and wine & spirits growth (decline) net sales assumptions for fiscal 2027 exclude $142 million for the March 1, 2025, to June 1, 2025, period. These are no longer part of the year-over-year results following the 2025 Wine Divestitures.

STZ projects enterprise organic net sales growth (decline) of (1)%-1%, beer net sales growth (decline) of (1)%-1%, and wine & spirits business organic net sales growth (decline) of (1)%-1%. Enterprise operating margin on a reported and comparable basis is projected to be 32-33%, with beer operating margin of 37-38% and wine & spirits operating margin of 5-6%.

Shares of this Zacks Rank #3 (Hold) company have lost 1.5% in the past six months against the industry’s growth of 17.1%.

STZ's Stock's Price Performance

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